Ruth’s Chris’ profit falls 62% on traffic slowdown

HEATHROW Fla. Ruth’s Chris Steak House Inc., the industry’s largest upscale steakhouse operator and franchisor, continued its downward spiral with a 62-percent plunge in its fourth-quarter profit on a 1.1-percent uptick in revenues. The company said its performance was hit by “continuing challenges with guest traffic driven by an uncertain economy and a more cautious consumer.”

For the 13-week quarter ended Dec. 30, the company earned $4.1 million, or 18 cents per share, compared with earnings of $10.7 million, or 46 cents per share, in the 14-week quarter a year earlier. In the latest quarter, Ruth’s Chris logged higher labor, operating and food costs, and in the year-earlier quarter the company booked a gain of $3.1 million, or 9 cents per share, in Hurricane Katrina-related insurance proceeds.

Revenue for the fiscal 2007 fourth quarter totaled $89 million. Same-store sales fell 5.6 percent at corporate locations. The company operates or franchises about 119 locations.

Despite its recent $92 million acquisition of Columbus, Ohio-based Mitchell’s Fish Market, which gives Ruth’s Chris another growth vehicle and a foothold in the upscale seafood market, the company is bearish on its prospects for the current year.

It expects a same-store sales decrease of between 2 percent and 5 percent for the year. Remodeling initiatives will result in negative short-term sales and profit at certain locations, the company said, and earnings from continuing operations, including Mitchell’s operations, should total between 55 cents and 60 cents per share, down from last year’s per-share income from continuing operations of 78 cents.

Planned new restaurant openings include six corporate locations and between six and eight franchised units. Expansion on the 19 Mitchell’s Fish Markets, two Mitchell's Steakhouses and one Cameron’s Steakhouse should begin late in the year, the company said.